As patent cliffs threaten many of biopharma’s top-selling products, the industry is well-equipped to respond due to favorable conditions for mergers and acquisitions (M&A), according to a recent research note from Morgan Stanley. The July 11 report indicates that products losing exclusivity through 2030 generate $183.5 billion in annual sales, with Amgen, Bristol Myers Squibb (BMS), and Merck facing the highest revenue exposure.
Morgan Stanley estimates that Big Pharma has $383.1 billion in firepower available for dealmaking, based on company financial reports and data from Visible Alpha and FactSet. The firms with the most resources for acquisitions are Johnson & Johnson (J&J), Merck, and Novo Nordisk. The Morgan Stanley team, led by Terence Flynn, Ph.D., noted that conditions remain favorable for bolt-on M&A as large-cap pharma companies have the financial capacity and the need to secure future revenue. J&J, for instance, is in a strong position with only 33% of its revenue at risk due to patent expirations through 2030, compared to an industry average of 38%.
Amgen tops the list of companies with the most revenue at risk (67%), with major products like Prolia, Xgeva, Enbrel, and Otezla set to lose exclusivity by the decade's end. To mitigate this, Amgen made a significant $27.8 billion acquisition of Horizon, bringing in potential blockbusters such as Tepezza, Krystexxa, and Uplizna. BMS follows closely, with 63% of its revenue at risk due to upcoming patent expirations of Eliquis, Opdivo, and Revlimid. BMS has been proactive, acquiring Karuna, Mirati, and RayzeBio. Merck, with 56% of its revenue at risk, largely from Keytruda, is also seen as needing to offset its patent loss exposure, and is expected to pursue further acquisitions. Morgan Stanley's analysis suggests that recent regulatory clarity from the FTC on pharma transactions may further facilitate M&A activities in the sector.
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